Tax cuts don't make basic economic sense - Page 2 - Politics Forum.org | PoFo

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#15137023
ccdan wrote:Terribly wrong assumptions.

If revenues are less, government can just spend less, not necessarily borrow money.

That's assuming government does actually cut its budget.

In reality that very often does not happen.

The talk is all about cutting taxes, but no one wants to talk about cutting the budget, or reducing the budget deficit.


To answer your objection, yes, if that were the case, then my whole argument in this discussion would not apply.

I apologise, my opening post was not the best worded. It was assuming we were talking about tax cuts paid for by budget deficits (adding to the national debt).
#15137217
Puffer Fish wrote:That's assuming government does actually cut its budget.

In reality that very often does not happen.

The talk is all about cutting taxes, but no one wants to talk about cutting the budget, or reducing the budget deficit.
. . . .
To answer your objection, yes, if that were the case, then my whole argument in this discussion would not apply.

I apologise, my opening post was not the best worded. It was assuming we were talking about tax cuts paid for by budget deficits (adding to the national debt).

Puffer Fish, I'm not singling you out, but the conversation you are having simply stimulated this thinking.

I keep telling you, that I'm not an expert, but I'm all you have here for an MMTer.

The MMT based analysis of what happens when the US cuts taxes and also cuts the exact amount of spending is ---
. . . I'll assume that the cuts are mostly for the top 20% of earners.
So what happens?

1] The people whose income is directly related to the spending cuts is reduced. For example, workers in a plant making jet fighters will be laid off if the Gov. stops buying the jets. [In normal times they go on unemployment which is a state program , but they get somewhat less on unemployment and so they often spend less.] People who were getting money to buy food with Food Stamps (now with a debit card) will spend less on food or some other thing.
2] This reduction in spending will show up as a drop in GDP. It will also show up as a drop in sales and profits of small businesses where they live.
3] Some of the people who get the tax cuts will spend it all, but others will save some of it. Economic history tells us that about 20% of it will be saved.
4] MMTers have proved that saving is a dead end for the money, until the saver wants to spend it. Saving does nothing to stimulate the US economy in any way. This is also true of dollars spent (by the importer) to buy stuff from overseas.
. . . Banks don't need more deposits to make more loans.*
5] So, 100% of the spending cuts reduce the GDP dollar for dollar.
6] So, only 80% of the money left in the hands of the people gets spent to 'increase' the GDP.
7] Therefore, cutting taxes and cutting an equal amount of spending will always reduce the GDP. It, also, reduces the sales and profits of small businesses.

Now, those who want tax cuts will argue that the savings does do some good in the economy. They will assert this 'til their dying day. Do they have any evidence? I would like to see it. I will reject all simple assertions of it though.

Notes:
. * . The Fed. has been giving money to banks with QE and other programs for many years now (since 2008). The amount has been several trillions, has trillions more been loaned into the economy? Maybe, but it has been used to buy corp. stock and real estate. This does not stimulate the economy.
.
#15140220
Steve_American wrote:4] MMTers have proved that saving is a dead end for the money, until the saver wants to spend it. Saving does nothing to stimulate the US economy in any way.

I'll tell you how classical conservative economists have viewed this.
If people are generally less inclined to spend money and more inclined to save it, then price levels go down, eventually reaching a level where economic exchange continues as before. So the incentive resulting from reduced prices will exactly cancel out the effect of people's reduced propensity to spend.

You see, when people are not wanting to spend as much, they are also wanting to save more, so money becomes more valued and sellers are willing to lower their prices. It reaches an equilibrium.

Now, obviously this may not apply so much in a situation of inequality, but would apply in a situation where everyone is roughly partaking in an equal way in the economy.


Now, I do not want you to feel like you are ignorant for not having known about this, because I would say the majority of economists these days think the same way like you, and don't really realize this or take it into account.
#15140228
Politics_Observer wrote:Tax cuts don't help anybody but the rich.

Unless you're cutting taxes on the poor and middle class and not the rich. Letting the non-rich keep more of their money means they'll have more wealth, and they'll buy these things from businesses.

It comes down to if private citizens can spend their money better than the government can.
#15140266
Unthinking Majority wrote:Unless you're cutting taxes on the poor and middle class and not the rich. Letting the non-rich keep more of their money means they'll have more wealth, and they'll buy these things from businesses.

It comes down to if private citizens can spend their money better than the government can.


Of course the same logic applies to the rich too. Having more money doesn't somehow mean you're LESS responsible of less deserving of keeping it.

Politics_Observer wrote:@Unthinking Majority

Unfortunately, a lot of those tax cuts went to the super wealthy (top 1%) and not to the rest of society.


Only 9.3% of the last tax cuts went to the top 1%. https://www.forbes.com/sites/kotlikoff/ ... bcb89af209 Of course, the top 1% pay more in taxes than the bottom 25%, so there's that. Likewise 82% of Bush's tax cuts went to the lower classes. https://www.cbpp.org/research/budget-de ... s-tax-cuts

The idea that only the rich benefit from tax cuts continues to be popular, but it simply isn't based in fact.
#15140284
@Wolvenbear

Yeah right! Kinda like our billionaire Trump paying only $750 in taxes. I checked your source at https://www.cbpp.org/research/budget-de ... s-tax-cuts and it makes no mention of those tax cuts going to the lower classes. You are being a bit misleading aren't you?
#15140537
Politics_Observer wrote:@Wolvenbear

Yeah right! Kinda like our billionaire Trump paying only $750 in taxes. I checked your source at https://www.cbpp.org/research/budget-de ... s-tax-cuts and it makes no mention of those tax cuts going to the lower classes. You are being a bit misleading aren't you?


It specifically says that the tax cuts ALLOWED to expire were on couples making above 450,000. I suppose "lower class" is open to interpretation, of course, but nothing in there is misleading. But, either way, it shows that the majority of the taxes didn't go to the "1%" as you originally claimed.
#15140567
@Wolvenbear

You make a fair point given your source, however, you neglect the fact that the top 1% are known to employ tax attorneys and CPAs that help them exploit legal loopholes in the tax code or offshore their money in tax havens like say the Caymen Islands for example. Their are loop holes within the tax code that billlionaires and millionaires can exploit to reduce or even avoid taxes altogether. How else do you think Trump avoided paying taxes here in the U.S. while still being held liable for taxes in other countries that were not tax havens?

Another thing to consider is that the 2017 Tax Cuts and Jobs Act, which Trump and the republicans passed, lowered taxes for most households but mostly for the rich (Wamhoff & Gardner, 2019). This law has made America's tax system less progressive and more regressive (Wamhoff & Gardner, 2019). That being said, according to the data I have found, it would appear that the 15% between the bottom 80% and top 5% are the ones that pays the most in federal taxes but not the top 5% though it seems they pay hefty share according to my sources.

So I will have to concede to you a little bit that according to your source and my source, that top 1% pay more than I previously thought. That being said, I am pretty sure that their are members in the top 1% who have no qualms with using tax attorneys and CPAs to offshore their money in tax havens to avoid paying taxes and to exploit legal loopholes in the tax code. Another thing to bear in mind, according to my sources is that many state and local taxes are regressive and not progressive like federal tax law.

However, back to the current Trump tax law. It would appear that the facts do bear out that the recent tax law passed by Trump and the republicans have benefited the wealthy more than the working classes. Here is a chart showing the the tax rates paid by the various classes before the Trump tax cuts and then after the Trump tax cuts.

For each class of taxpayers, the red-shaded illustrates they pay a smaller share, and the green-shade illustrates which class pay a larger share under the respective tax laws before the Trump tax cuts and after the Trump tax cuts. The chart demonstrates that a smaller share is now paid by the richest 1 percent and the following richest 4 percent (Wamhoff & Gardner, 2019). All other classes pay a larger share of federal taxes under Trump's current law compared to before his law went into effect (Wamhoff & Gardner, 2019).

Image
(Wamhoff & Gardner, 2019)


Reference-

Wamhoff, S., & Gardner, M. (2019, April 11). Who pays taxes in America in 2019? Institute on Taxation and Economic Policy. Retrieved December 1, 2020, from https://itep.org/who-pays-taxes-in-amer ... gKesPD_BwE
#15140626
I am not abbreviating your post to be dishonest (after all one can look up to see your whole context), rather I am abbreviating you to make my post more concise.

Politics_Observer wrote:@Wolvenbear

1) Rich people use tax professionals to lower their taxes

2) That the Trump tax cuts benefitted the rich more than the poor is regressive.

3) The chart shows the total precentage of the taxbill for the poor slightly increased.


So, before I respond to any of these, I'm impressed that someone is civilly arguing politics and will concede that their opponent has a point. That's rarer than a four leaf clover. You have earned my respect as a fair and honest debater, whether or not we come to an agreement.

Moving to the debate itself. While none of your points are wrong, in and of themselves, they are not being viewed in context. So let's supply that context.

1) First, everybody uses tax professionals today. Put bluntly, given the complexity of the tax code and the penalties for making a mistake if you are audited...it's too difficult and scary for most people to do their taxes. Unless you live in the most rural of areas, there are tax professionals who donate their time to the poor everywhere. 81.2% of people get help (https://www.gobankingrates.com/taxes/fi ... 6R%20Block.) If we object to using tax professionals, then virtually everyone in the country is a criminal or cheat.

Second, no one of any economic stripe objects to tax breaks. And EVERYONE who is offered a tax break takes it. It's like objecting to people using coupons. Clearly, it's not illegal...it's in the tax code after all...so we can't object on those grounds. And if we object to rich people using exemptions, then we have to object to the single mother with three kids using her 6000 dollar tax credit (thanks Trump) to not only avoid taxes...but to get money back. No one of sound mind says "Thanks for pointing out that I qualify for this break, but I'd rather pay the IRS 500 bucks more." So, while true, this point lacks much substance.

2) I will use the most beneficial definition of "regressive taxes" to address this point. (A regressive tax is one that imposes the same rate of taxes on people regardless of income.)

First, the Trump cuts are not regressive, as they actually make the ICC refundable, even if the person does not pay taxes. Thus, in impact to the poor in terms of percentage (of their income not the federal income), the Trump tax cuts (actually authored by Paul Ryan) are the first tax cuts ever to benefit the poor more than the rich, as no rich person has a negative tax rate.

More importantly, this assumes that regressive taxes are bad. They most certainly are not.

To use an example. When one shops at a store, and sees that a bottle of soda costs $2, they would expect to pay $2. But, if they got to the counter and were charged $20 in taxes on that one bottle, they would leave the bottle behind and complain heavily. They would be even more chagrined if the person behind them in line paid $1 for 5 bottles.

Thus, if it would offend me to pay 1/3 of my income, I must accept that it is unfair to expect another to pay 1/3 of theirs. And this is before I even consider the hundreds of other taxes people pay.

3) I will assume your graph is true for the sake of this argument.

We need to differentiate between the tax burden on individuals, and the percent of taxes collected from a group. To make up numbers, if an individual is given a 75% tax cut, meaning he pays 25 dollars instead of 100, he will likely be apathetic that his group, although each one paying a significant share less, pays a statistically insignificant percent more.

Here, in 2017, the personal deduction, that amount of money one makes which they pay no income taxes on, was $4050. In 2018, it was $12,000.
https://taxfoundation.org/2017-tax-brackets
https://taxfoundation.org/2018-tax-brackets

Since it was almost impossible to work part time in 1997 when I started in 1997 and not make 12,000, this means that every working person received a minimum of an $800 tax break. If you're poor, that's a significant break. While it may mean nothing in the terms of trillion dollar deficits, for the poor person, that's a huge break. That may be a months rent and utilities, a car payment, or an emergency covered.

The Trump tax cuts not only took massive numbers of people off the roles, they transformed hundreds of thousands from taxpayers into benefit recipients. And, by taking them off the roles, they marginally raised the percentage of all of the remainders into the general total.

None of the three points, however, means that tax cuts are bad, or that they hurt the poor.
#15140723
@Wolvenbear

I am enjoying our debate. I want to continue it. Right now I am getting bombarded by a lot of school work and errands I have to run. I will get back to you. In the meantime, for our debate, I did some research on the least biased authortative sources on tax policy. So far, according to my research, this appears to be Tax Policy Center that is rated as least biased out of the Tax Foundation, Institute of Taxation and Economic Policy, Center on Budget Policy and Priorities. Here is the website on the Tax Policy Center. Two of the sources I have used are rated as high on facts but have a center left bias. Tax Policy Center is rated as high but is less biased than the two sources I have used and one of the sources you have used which is the Tax Foundation. So, I think that is a good source to use as basis on facts on has the least bias. Here is there website: https://www.taxpolicycenter.org/ .
#15140770
Just to clarify, I was saying that tax cuts don't make economic sense if they are paid for through budget deficits.

That was the point of this discussion.


Obviously, right now most governments do not have balanced budgets, and are running deficits, so that is the likely reality if there are tax cuts, it will simply end up getting paid for through more debt.

My claim is that tax cuts don't make sense if your government has to borrow the money to do so.
#15141964
Wolvenbear wrote:Tax cuts are never "paid for" through deficits. First, tax cuts don't "cost" anything, and second, spending accounts for deficits.


Tax cuts may not be "spending" or "cost" anything, but they have the same effects as spending. These are to increase the deficit and to increase the amount of money in the economy where it can be (saved or) spent which gives someone income and adds to the GDP.

Therefore, tax cuts are a lot like spending.

They almost never pay for themselves, either.
.
#15141965
Steve_American wrote:Tax cuts may not be "spending" or "cost" anything, but they have the same effects as spending. These are to increase the deficit and to increase the amount of money in the economy where it can be (saved or) spent which gives someone income and adds to the GDP.

Therefore, tax cuts are a lot like spending.

They almost never pay for themselves, either.
.


Tax cuts work as designed if they're coupled with spending cuts of equal amount. Otherwise, yeah they drive up debt.
#15141970
Steve_American wrote:Tax cuts may not be "spending" or "cost" anything, but they have the same effects as spending. These are to increase the deficit and to increase the amount of money in the economy where it can be (saved or) spent which gives someone income and adds to the GDP.

Therefore, tax cuts are a lot like spending.

They almost never pay for themselves, either.
.


Yet if the money is spent, it is taxed anyway. If it is saved, it is taxed under different standards (as no one of any means holds their money in a mattress). Thus creating more economic transactions increases the overall tax base even as it decreases the amount made on individual transactions.

In fact the only tax cut that has been accompanied by decreased revenue is the 2001 variant, and that also coincided with the 9/11 attacks...so it's hard to claim it costs money, when revenues never go down after.
#15141994
Wolvenbear wrote:
Yet if the money is spent, it is taxed anyway. If it is saved, it is taxed under different standards (as no one of any means holds their money in a mattress). Thus creating more economic transactions increases the overall tax base even as it decreases the amount made on individual transactions.

In fact the only tax cut that has been accompanied by decreased revenue is the 2001 variant, and that also coincided with the 9/11 attacks...so it's hard to claim it costs money, when revenues never go down after.

Sir, I have no idea how you could be so wrong.

You wrote, "Yet if the money is spent, it is taxed anyway." So, some guy doesn't pay $100K in taxes because of the tax cut, and he spends it. Are you really saying that when he spent it, that transaction would result in $100K gong to the Gov. (IRS?)? Really?
. . . If the taxes accumulate over many transactions, then this is good for the GDP because every one of those transactions adds to the GDP. Someone was getting income and another one was getting a service or stuff.

You wrote, "If it is saved, it is taxed under different standards (as no one of any means holds their money in a mattress)." AIFAK, the US never taxes savings. Are you claiming that inflation will "tax" his savings 100% away in just 1 year? You know this is not what happens. So, please explain how savings are taxed and at what rate.

You wrote, "Thus creating more economic transactions increases the overall tax base even as it decreases the amount made on individual transactions." This makes no sense to me. The "Thus" that you wrote is pretty meaningless. Just what are you claiming?
. . . Maybe you are claiming that the guy who didn't pay the $100K in taxes, spends it. And this generates income and sales and so adds to the GDP. OTOH, deficit spending does the same thing. So, if the US Gov. cuts a guy's taxes by $100K he gets the $100K, because he was rich he spends about 20% of it, and the rest he saves. However, if I correctly assume that the Gov. spends the $100K anyway which adds to the deficit, then the economy sees $120K of spending. If the taxes of poor people were cut than they would spend mone like 90% of it. So, cutting the poor's taxes adds $190K of spending to the economy. Anyway, just deficit spending also adds income to the economy, so if that is the goal, then deficit spending is better because 100% of the spending goes to at least one someone's income while just 20% or 90% does with the tax cuts.
. . . OTOH, maybe you are claiming that savings are put into banks, and that the banks then lend them out to borrowers. Well, I have shown that it has been proven with an experiment in2014, that this is just false. Banks don't lend out deposits. they create new money out of thin air with every loan. No body here has argued with me about this, except maybe with appeals to authorities. I discount them because in all sciences, experiments roll right over appeals to authority.

You wrote, "In fact the only tax cut that has been accompanied by decreased revenue is the 2001 variant, and that also coincided with the 9/11 attacks...so it's hard to claim it costs money, when revenues never go down after." Sir, this is a very bold assertion. My sources deny this totally. Can you provide actual numbers? OTOH, I think you are just thinking abut the 1st year. I think you are ignoring every following year. Why do you think that this is OK?
. . . For example, Pres. Reagan passed tax cuts. When he was sworn in the US national debt stood at about $1T. Eight years later when Pres. Bush I was sworn in it stood at about $4T. This is a 400% increase in 8 years, a record percentage increase that will never be matched. Are you going to try to explain this by arguing that Ragan spent that much more, because each yer his tax cuts brought in as much money as the amount that would have been collected without the tax cuts? Go ahead, explain how these facts can be true.

Lurkers, I have replied to every point that he made and I hope I have shown why they are without value.
#15142850
Steve_American wrote:Sir, I have no idea how you could be so wrong.

You wrote, "Yet if the money is spent, it is taxed anyway." So, some guy doesn't pay $100K in taxes because of the tax cut, and he spends it. Are you really saying that when he spent it, that transaction would result in $100K gong to the Gov. (IRS?)? Really?


Hmm, no I didn't say that. It appears you're trying to negate the point by taking it to an extreme. Obviously, he doesn't pay 100% in taxes, for then he simply wouldn't make the purchase to begin with. Nevertheless, when he purchases something, he pays not only sales tax, but a variety of other taxes on his purchase. The company(ies) he spends his money with likewise have to pay taxes when they spend the money he gave them, and they have to pay taxes on the earnings they made from the sales. And so on. Even at slightly lowered rates, the increased amount of times that money is spent usually offsets the minor reduction in the treasury from any given transaction.

You wrote, "If it is saved, it is taxed under different standards (as no one of any means holds their money in a mattress)." AIFAK, the US never taxes savings. Are you claiming that inflation will "tax" his savings 100% away in just 1 year? You know this is not what happens. So, please explain how savings are taxed and at what rate.


I see that you're being deliberately obtuse. Yes, in the US savings are taxed. IRA accounts, stocks, bonds, etc, are, in fact, taxed. Obviously, it's not at 100%, because, again, no one would invest or save, but it is still taxed nonetheless. Moreover, even if one merely puts their money in the bank, the bank uses that money as collateral for loans, which are repeatedly taxed. This is how savings accounts accrue interest, which is, of course, taxed. https://www.investopedia.com/ask/answer ... x%20return.

. . . Maybe you are claiming that the guy who didn't pay the $100K in taxes, spends it. And this generates income and sales and so adds to the GDP. OTOH, deficit spending does the same thing. So, if the US Gov. cuts a guy's taxes by $100K he gets the $100K, because he was rich he spends about 20% of it, and the rest he saves. However, if I correctly assume that the Gov. spends the $100K anyway which adds to the deficit, then the economy sees $120K of spending. If the taxes of poor people were cut than they would spend mone like 90% of it. So, cutting the poor's taxes adds $190K of spending to the economy. Anyway, just deficit spending also adds income to the economy, so if that is the goal, then deficit spending is better because 100% of the spending goes to at least one someone's income while just 20% or 90% does with the tax cuts.


This is obviously untrue. Even in theory, deficit spending costs the government money. That money creates interest and further burdens on the treasury. Even if the economic growth somehow returns the original money to the coffers, the Treasury is still poorer for the interest on that money. Moreover, depending on how the money is spent, it often doesn't return it's investment, as it creates no real stimulating effect.

. . . OTOH, maybe you are claiming that savings are put into banks, and that the banks then lend them out to borrowers. Well, I have shown that it has been proven with an experiment in2014, that this is just false. Banks don't lend out deposits. they create new money out of thin air with every loan. No body here has argued with me about this, except maybe with appeals to authorities. I discount them because in all sciences, experiments roll right over appeals to authority.


Banks are limited by both state and federal law as to how much "money out of thin air" they can create. While banks can be rather creative on how they get around some of these requirements, the fact remains that if deposits stop coming in, loans stop going out. That reality is a bit messier than my simplified version doesn't mean that the basics are incorrect.

You wrote, "In fact the only tax cut that has been accompanied by decreased revenue is the 2001 variant, and that also coincided with the 9/11 attacks...so it's hard to claim it costs money, when revenues never go down after." Sir, this is a very bold assertion. My sources deny this totally. Can you provide actual numbers? OTOH, I think you are just thinking abut the 1st year. I think you are ignoring every following year. Why do you think that this is OK?
. . . For example, Pres. Reagan passed tax cuts. When he was sworn in the US national debt stood at about $1T. Eight years later when Pres. Bush I was sworn in it stood at about $4T. This is a 400% increase in 8 years, a record percentage increase that will never be matched. Are you going to try to explain this by arguing that Ragan spent that much more, because each yer his tax cuts brought in as much money as the amount that would have been collected without the tax cuts? Go ahead, explain how these facts can be true.

Lurkers, I have replied to every point that he made and I hope I have shown why they are without value.


You're simply saying that, because the debt went up, revenues MUST have gone down. This assertion makes no sense, as spending increased dramatically under Reagan and Bush, outpacing INCREASED revenues every year. You're conflating apples to hubcaps. This is like saying that the guy who just got a 10 grand a year raise at work and celebrated by buying a 100 grand car is somehow making less money because he's spending more money. It's clearly wrong.

Other than create a lot of ridiculous strawmen, I don't see what you think you did here. You didn't even do a good job swatting down your own creations, let alone touch my actual arguments.
#15143116
Wolvenbear wrote:Hmm, no I didn't say that. It appears you're trying to negate the point by taking it to an extreme. Obviously, he doesn't pay 100% in taxes, for then he simply wouldn't make the purchase to begin with. Nevertheless, when he purchases something, he pays not only sales tax, but a variety of other taxes on his purchase. The company(ies) he spends his money with likewise have to pay taxes when they spend the money he gave them, and they have to pay taxes on the earnings they made from the sales. And so on. Even at slightly lowered rates, the increased amount of times that money is spent usually offsets the minor reduction in the treasury from any given transaction.

I see that you're being deliberately obtuse. Yes, in the US savings are taxed. IRA accounts, stocks, bonds, etc, are, in fact, taxed. Obviously, it's not at 100%, because, again, no one would invest or save, but it is still taxed nonetheless. Moreover, even if one merely puts their money in the bank, the bank uses that money as collateral for loans, which are repeatedly taxed. This is how savings accounts accrue interest, which is, of course, taxed. https://www.investopedia.com/ask/answer ... x%20return.

This is obviously untrue. Even in theory, deficit spending costs the government money. That money creates interest and further burdens on the treasury. Even if the economic growth somehow returns the original money to the coffers, the Treasury is still poorer for the interest on that money. Moreover, depending on how the money is spent, it often doesn't return it's investment, as it creates no real stimulating effect.

Banks are limited by both state and federal law as to how much "money out of thin air" they can create. While banks can be rather creative on how they get around some of these requirements, the fact remains that if deposits stop coming in, loans stop going out. That reality is a bit messier than my simplified version doesn't mean that the basics are incorrect.

You're simply saying that, because the debt went up, revenues MUST have gone down. This assertion makes no sense, as spending increased dramatically under Reagan and Bush, outpacing INCREASED revenues every year. You're conflating apples to hubcaps. This is like saying that the guy who just got a 10 grand a year raise at work and celebrated by buying a 100 grand car is somehow making less money because he's spending more money. It's clearly wrong.

Other than create a lot of ridiculous strawmen, I don't see what you think you did here. You didn't even do a good job swatting down your own creations, let alone touch my actual arguments.

Like a typical right winger, you accuse me of lying with figures, while doing it your self.

In 1983 Reagan raised FICA taxes by almost 100%. So, when you say "tax revenues" increases did you mean income tax revenues or all tax revenues?

When a bank makes a loan, it automatically increases the total bank deposits of all American banks. When the borrower spends the money (unless he sends it overseas) it just moves to a different bank and so the total deposits are not reduced. In a pinch the lending bank can borrow in the overnight market to meet its requirements. Because that interest rate is much less than the interest rate on the loan, the bank is still making a large profit.
. . . Therefore, the bank was not constrained when it made the loan.

https://en.wikipedia.org/wiki/Reaganomi ... rected.png

This image shows 2 things.
1] Averaged over Reagan's 8 years he had 5% inflation in each year. Is it any surprise that tax revenues went up after his income tax curs? I think not.
2] Oils prices were around $32/barrel for the 1st 5 years and then dropped to about $16/barrel for the last 3 years. These high oil prices meant that the US Gov. had to pay a lot for oil/gas. Compare these prices to the 70s. Until 1973 they were about $3/b, then in '74 jumped to $11/b and increased to $14 over the next 5 years. Then they jumped again in '79 to $22/b, and reached $37/b in '80.

The only ways Reagan spent more money that I remember were a) he increased the size of the US Navy, and b) had to spend more on everything because of inflation. But, I may not remember all the ways Reagan increased spending.

This may be my last reply because I'm sick of shooting down his attempts to dispute my claim.

I repeat the corrected claim for the lurkers. I admitted that my sources had combined the CARES Act spending with the actions of the Fed. Res. that had bought US bonds, corp. bonds , and even corp. stock shares to make sure that the stock market didn't crash. The Feds actions were actually larger that the CARES Act. But, Wolvenbear has ignored my correction and claimed that I had moved the goalposts for the last 3 or 4 replies. So, yes I moved them as soon as he made his 1st reply. Now, he s refusing to give any credit for my doing that. He keeps repeating numbers that relate only to the CARES Act.
. . . Maybe he doesn't grok that the Fed. Res. bank isnot independent. That the Gov. (Treasury Sec.) can give it suggestions or orders. That the Gov., therefore, includes the Fed. n any case, Repubs in Congress were well are of promises made by the Fed. Chairman to "do whatever is necessary" in the pandemic.

Now, he points out that "small business" has a strange definition. It is "fewer than 500 employees". My definition would be more like fewer than 50 employees, for my thinking in this pandemic of what businesses that needed the relief the most. For me a corp. with 400 employees is a large business. Therefore, I don't accept that the CARES Act was written well. I'm not able to research to see what part of the $18 B to $45 B (of the $500B authorized) actually spent under the PPP part of the CARES Act went to corps I would call small. medium size or large, let alone 'huge'. About $100M *seems* to have gone the Trimp and his family.
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